Borrowing to invest in stocks can be a real 'drag' [Dallas Morning News, 19Dec00] Scott Burns uses "variance drag" (the fact that stocks don't provide smooth, predictable returns) as well as withdrawal rate studies to show that borrowing against your house in order to invest in equities can sometimes make you a homeless pauper.

Fee caps: a history lesson [Investment Executive, Dec00] Keith Douglas remembers a time when, as president of the Investment Funds Institute of Canada, he had to lobby provincial regulators to remove caps on mutual fund management fees. Today, despite a 200-fold increase in mutual fund assets, management fees continue to rise. And the only people who are still "stunned" are any individual investors who expected the fund industry to act "in the public interest."

It was some 23 years ago that I initiated discussions with the Ontario Securities Commission about deregulating mutual fund management fees. ... Regulation limited a 2% maximum fee to the first $1 million of assets and, if I recall correctly, scaled down to 50 basis points on assets of more than $100 million. If you are stunned by these numbers, remember that this was the reality in 1977 and it really underscores how times have changed. Our first foray with securities administrators was viewed almost as heresy. It was unheard of not to control the level of management fees in the public interest.

Risk Isn't Everything [Morningstar, 08Dec00] Research Director John Rekenthaler on risk vs. uncertainty and the pitfalls of chasing data-mined performance:

Unlike risk, uncertainty cannot be measured. It can be thought of as "that which confounds the risk predictions." ... No, the villains are those money managers who oversell and overpromise the benefits of back-tested, "proven" strategies--and who charge handsomely for the privilege. The apparent sure thing is a powerful temptation. Resist it.

Q. How much attention should investors pay to advertisements of fund performance?

A. If you're working through the right questions—'What kind of fund do I want to buy?' and 'Where does it fit in my portfolio?'—you're not scanning fund ads. So, if you're investing the right way, you don't pay much attention to the ads. And to be fair, I don't think that you'd want to pay much attention to Morningstar's star ratings either.

The Risk of "Buying Performance" [IndexFunds.com, 08Dec00] Jeff Troutner examines the pitfalls of chasing fund performance by analyzing the actual record of one particularly "hot" fund.

Vanguard may yet test Canadian waters [National Post, 05Dec00] Jonathan Chevreau reports that John Bogle, addressing a mutual fund industry conference in Toronto, recommends that "Canadians should probably invest half outside the country, he said, split evenly between the U.S. and the rest of the world."

The Couch Potato Portfolio, Plus [Scott Burns, 03Dec00] Scott Burns' famous "Couch Potato" portfolio (so named because even a couch potato can rebalance a two fund portfolio once a year) is enhanced using two more funds as recommended in Bill Bernstein's new book, The Intelligent Asset Allocator. In a companion article, Burns reviews Why Indexing Succeeds by citing mutual fund cost data from Bernstein's book. Once again, costs matter.

The TSC Streetside Chat: Vanguard Founder John Bogle [TheStreet.com, 02Dec00] John Bogle reflects on his 50+ year career during which the mutual funds industry grew by three orders of magnitude. As always he stays his course by remaining a staunch advocate of indexing, by maintaining his conviction that costs matter, and by refusing to make predictions about the future.

BGI Canada Launches First Bond ETFs [IndexFunds.com, 23Nov00] BGI Canada makes history by introducing the first bond ETFs, iG5 [symbol: XGV] and iG10 [symbol: XGX], which respectively track the performance of a 5 and 10 year Government of Canada bond.

John Bogle Walks the Talk [SmartMoney, 22Nov00] A nice profile of Vanguard founder John Bogle, who even at age 71, continues the struggle to make the fund industry serve its clients.

ETF investing not just for the little guy [National Post, 21Nov00] Keith Matthews contends that ETFs are an excellent indexing vehicle whether you're a DIY investor or you draw on the services of a professional adviser.

Using losses has tax limits [National Post, 21Nov00] Year-end tax-loss selling is an excellent strategy when markets have declined as they have this year. Jonathan Chevreau describes how to avoid some common pitfalls in claiming capital losses.

Dr. Know [SmartMoney, 10Nov00] An interview with Bill Bernstein, author of the new book The Intelligent Asset Allocator and proprietor of the Efficient Frontier website. While Bernstein's "ideal asset allocation" uses Vanguard funds, Canadians can implement most of it using ETFs and low-MER Canadian index funds.

Success In Investment Management: What Can We Learn From Indexing? [Nov00] In this speech before the Investment Analysts Society of Chicago, John Bogle commemorates the centennial of Louis Bachelier's thesis that since stock prices move randomly "the mathematical expectation of the speculator is zero" by once more emphasizing that the best the investor can hope to achieve is the market return minus costs.

"The thing investors don't understand is that the best way to win is not to try," says Terrance Odean, a finance professor at the University of California at Davis. "On average, over the long run, index funds beat actively managed funds," because actively managed funds charge far higher annual expenses and incur heftier trading costs. ... "The harder investors try to beat the market, the worse they do, primarily because of the trading costs they incur," Mr. Odean says.

TD Waterhouse US evicts Canadian customers [31Oct00] Apparently Canadian securities regulators, in their zeal to "protect" Canadians from God only knows what, have instructed TD Waterhouse US and other US brokers to terminate all business with Canadian residents. So why can't they use a bit of that zeal to protect Canadian investors from the likes of Bre-X, YBM et al?

Falling gorilla bruises index investors and When gorillas turn savage [National Post, 26Oct00] After a one-day drop in the share price of Nortel Networks by 25% and in the TSE 300 index by 8% some proponents of active management ignore decades of contrary evidence and quickly proclaim victory. Perhaps their reports of indexing's death are, um, greatly exaggerated.

Your planner won't send you this book [National Post, 14Oct00] Jonathan Chevreau reviews Daniel Stoffman's new book, The Money Machine: How the Mutual Fund Industry Works & How to Make It Work for You. Bylo's mini-review: Explores the conflicts-of-interest in the Canadian mutual fund industry. Explains why owning mutual fund companies is more profitable than owning mutual funds. Advises how to avoid getting caught in the money machine's gears.

Study: U.S. Investors Waste $36 Billion on Wall St. Fees [IndexFunds.com, 10Oct00] "Mutual fund investors this year will overpay Wall Street $36 billion to manage stocks, bonds, and real estate totalling $3.7 trillion. Nearly 1% per year of assets are wasted in unnecessary fees, according to IndexFunds' comprehensive new survey of mutual fund fees."

Interview: Robert Shiller [Investment Adviser, Oct00] Interview season continues with the author of Irrational Exuberance. If you think Bogle and Buffett are merely being "rationally pessimistic" then hang onto your expectations while you read this.

Investing Wisely in an Era of Greed [Fortune, 02Oct00] An excerpt from the new book, John Bogle on Investing: The First 50 Years, looks at risk and how to minimize it when equity markets are well above thier historical valuations. And of course, yet another Bogle interview.

Interview: John Bogle [Morningstar, 29Sep00] This must be interview season :-) In this one Vanguard's de facto chairman emeritus talks about some of the disadvantages of ETFs as well as other issues that challenge the mutual fund industry.

Fall 2000 issue [Efficient Frontier, Sep00] The latest quarterly edition is now available. Also Bill Bernstein's new book, The Intelligent Asset Allocator has just been published. Canadians can order a copy from Chapters here. Frugal Canadians who use a $10-off coupon pay just CA$28.95, shipping and taxes included.

Interview: Lee Kranefuss [IndexFunds, 25Sep00] An interview with Lee Kranefuss, BGI's CEO of U.S. Individual Investor Business that discusses ETFs, compares them to conventional index funds and even highlights Canada's pioneering role in the development of new ETF offerings.

Expert Q&A: John Brennan [Morningstar, 25Sep00] Morningstar users pose questions to Vanguard's Chairman and CEO on a variety of issues.

Interview: Gus Sauter [IndexFunds, 01Sep00] An interview with Gus Sauter, Vanguard's index guru, covers several topics including competition from exchange-traded funds, concerns about the fad for short-term investing, and the general outlook for the stock market.

ETF Update and Complete Listing [IndexFunds, 25Aug00] Here's a listing of all ETFs that trade on the American Exchange along with ticker symbols, MERs, asset sizes and recent returns, as well as a summary of upcoming distributions. Sometimes a US-based ETF can be substantially less tax-efficient than one might expect. MSCI Canada iShares (WEBS) is about to pay a whopping 23% distribution. Presumably this is because, as a US-based security, they were forced to realize a capital gain on the spin-off of Nortel Networks from BCE earlier this year. A Canadian-based fund (or individual) would have been able to avoid this.

Investment horizons that are too short and costs that are too high are the principal manifestations of the problems facing the mutual fund industry. When stocks come to generate lower returns, they will become far more visible. But the root cause of these problems is the industry's failure to focus on the primacy of the fund shareholder. It's called stewardship. The Investment Company Act of 1940 warns against organizing, operating, and managing funds in the interest of investment advisers rather than the interest of shareholders, but that warning is not adequately heeded today. It is high time that fund managers and independent directors, as well as public officials and the media, give these issues the attention they deserve.

For Investors,
Increased Activity Translates Into Lower Returns [Vanguard, Aug00] Many investors are abandoning a traditional buy-and-hold strategy as trading activity continues to grow. Is the increased trading paying off? Studies show that frequent trading is not an effective investment strategy. When the frequent trading occurs between mutual funds, all of the funds' investors can be affected. Vanguard explains why staying the course is still the best strategy.

The Retirement Fund Shell Game [IndexFunds.com, 08Aug00] Christian Chensvold explains how the 25% RRSP foreign content rule gets skirted by savvy investors. He offers an additional arguement for doing away with the limit altogether, "recent research ... found that the cap doesn't matter, as when foreign-content limits were dropped in the U.S., U.K. and Japan, investors still remained primarily in their home markets."

Asset Allocation Is Not Dead [IndexFunds.com, 04Aug00] When a single asset class outperforms by a wide margin, as the technology sector has for several years, some investors are tempted to lose discipline and abandon their diversified portfolios. Julia Curbo reminds us that it's in times like this that diversification through asset allocation is even more prudent than usual.

The Limits of Monte Carlo [Morningstar, 21Jul00] In this edition of his weekly column, John Rekenthaler discusses two important issues: 1. When they plan for their retirement many people concentrate on maximizing investment returns without considering how much money they'll actually need to spend. 2. Monte Carlo simulations, which are often used to project portfolio growth in the real world where formulaic projections are too simplistic.

Merchandising is a key driver in the investment process, Gordon Powers says. [Globe & Mail, 15Jul00] An excellent piece that says much that desperately needs saying about "our" industry. But one quibble with "Canada's mutual fund industry runs the risk of losing touch with its constituents." Who are the true constituents? Considering that the ~$400B in Canadian mutual fund assets now generates nearly $10B annually in fee revenues, is it any wonder if the actual fund industry constituents are no longer the unitholders?

Fund Industry Under Pressure [Associated Press, 11Jul00] The US General Accounting Office recommends that mutual fund companies be required to disclose to individual investors the exact amount of the fees they charge for operating costs. For example "an investor with $25,000 in a fund that charges a 2 percent expense fee would get a statement each year that clearly listed the $500 in charges."

"If you spell out what the facts are in terms of dollars and cents instead of in terms of percentages and ratios it really brings home the message that fees matter," said John Bogle, founder and former chairman of the Vanguard Group.

[11Jul00] Barclay's Global Investors has launched a TV ad blitz to market their new iShares Exchange-Traded Funds (ETFs). Bet you'll never see anything like this for Vanguard's forthcoming VIPERs! Here are the first four ads [in Apple QuickTime format free download].

SEC's Aftertax Disclosure Rules Found Taxing [10Jul00, Morningstar] It's far more informative to disclose a mutual fund's after-tax returns than the current practice of reporting only the pre-tax returns. Often two funds with the same gross returns vary significantly after accounting for taxes that arise from excessive turnover. But with complex, multi-bracket tax regimes the challenge is to provide numbers that are meaningful to investors.

How To Measure The True Cost Of Holding A Fund [05Jul00, The Fund Library] The more closely one studies mutual funds, the more "hidden costs" one finds. FundLib's devil's advocate provides a cogent explanation of how trading costs eat into a mutual fund's returns.

Mutual Fund Fee Impact Calculator [Jun00, Industry Canada] makes easy to see the impact of various mutual fund fees on investment return over time. You can see the effect that different fees have on returns or you can enter the costs for your specific fund, and then use the calculator to make fund comparisons. [Investors in US mutual funds should use the SEC Mutual Fund Cost Calculator.]

Exchange-Traded Funds: Barclay's Brad Zigler [23Jun00, Morningstar] a principal in charge of exchange-traded funds (ETFs) marketing and education at Barclays Global Investors (BGI) responds to the questions posed to him on the Morningstar Ask the Expert conversations forum.

Does an Investor Who is Younger than 40 Need Bonds? [22Jun00, IndexFunds.com] Conventional wisdom says no. But look at the chart of median future returns for various market P/Es. Then ask yourself the question again. BTW, the current P/E for the US stock market is 25.

Merton Miller [10Jun00, The Economist] Pioneer of modern financial theory Merton Miller dies at age 77. Miller, along with William Sharpe and Henry Markowitz, was awarded the 1990 Nobel Prize for Economics. Miller is best known (in collaboration with Franco Modigliani) for explaining the relationship between an enterprise's capital asset structure and dividend policy, the so-called M&M theorem.

Bogle: Fund industry at risk [01Jun00, CNNfn] Another interview with Vanguard's John Bogle. You can listen to it all (see link) but here are some important highlights:

On the challenges of long-term investing when mutual funds "don't last as long as you would expect; for example in the 1990s over 50 percent of all the mutual funds that have been in business during the decade are no longer here." (Never mind the average tenure of their managers. And imagine the distorted performance numbers of the survivors!)

Moreover fund managers today "are more short-term speculators. They turn over their portfolios almost 90 percent a year now, in contrast to a 15 percent to 20 percent turnover rate in the 1950s. Then, they would hold a stock for seven years, now it is just 406 days."

On net fund returns after fees and taxes: "over the past 15 years, shareholders have received about one-half of the capital accumulation they would have received in the market."

Two more strikes against mutual funds [24May00, MSN Investor] Mary Rowland argues that conventional open-ended mutual funds are doomed by the introduction of Exchange-Traded Funds. ETFs are not only cheaper to own and more tax efficient, but like stocks they can be traded throughout the day, bought on margin, sold short, etc. The latter features, however, may not be benefits. Remember: ETFs don't kill portfolios. Excessive trading kills portfolios.

BGI iShares [16May00] Barclays Global Investors has opened their new iShares website with information, including the prospectus, about their new Exchange-Traded Funds (ETFs.) These ETFs track a wide variety of indexes, and index "slices," and index segments as defined by S&P, Dow-Jones, Russell and MSCI. Expense ratios start at just 9 basis points. The first iShares will begin trading as early as 19May00. Here's a handy summary of the new ETFs and their cost.

Pfffffft! [14May00, Washington Post] Robert Shiller, author of Irrational Exuberance, argues that the bubble metaphor is an inappropriate characterization of the current stock market boom. Because of high investor confidence in the US economy, instead of a sudden burst we're more likely to experience a slow protracted market deflation.

Today's high investor confidence (as well as investors' willingness to act--to buy stocks) is not a natural, steady state. It is a sign that the market is likely to decline in coming years. The signal does not identify a sudden turning point. But there may never be a better warning.

Bylo rebutsIndex funds have their dark side, too [12May00, Globe and Mail] Larry Sarbit, fund manager for the AIC Group, sets out to expose the "dark side" of indexing. Bylo, industry gadfly and proprietor of this website, responds to the challenge by shining some light on the subject.

Consideration of bonds as an important asset class implicitly requires us to recognize, as I quoted in Common Sense on Mutual Funds, that "risk is not short-term volatility, for the long term investor can afford to ignore that. Rather, because there is not a predestined rate of return, only an expected one that may not be realized, the risk is the possibility that, in the long-run, stock returns will be terrible." Put another way, the risk is that the investment portfolio might not provide its owner-individual or institution-with adequate cash to meet future requirements for essential outlays. In short, that the investor will lose a ton of money, just when it is needed the most.

Capital Ideas Revisited [May00, Investment Advisor] Peter Bernstein, author of Capital Ideas and Against the Gods is concerned that because in recent years market indexes have become distorted they may no longer represent appropriate benchmarks for diversified portfolios. Those who index blindly may expose themselves to much greater risk than they realize.

My gut sense is that passive investing is the best strategy. But even that is frayed because what am I going to invest passively in? I’m still making a decision. If I said I’m going to own an S&P 500 index fund, which I used to think was the answer to all maiden’s prayers, I’m buying a very undiversified portfolio in which the greatest weights are the stocks that have gone up the most. Is that really how I want to invest? The passive choice today is an active one. There isn’t any place to hide.

Is there Useful Information in Mutual Fund Ads? [28Apr00, IndexFunds.com] A recent academic study found that highly advertised "top performing" funds provided no higher returns in the future than did a group of control funds. The advertising (whose entire cost is borne by current unitholders) did attract significantly more money compared to the control group. Bylo concludes that the most useful information in mutual fund advertising is buried in the disclaimer, for example Fidelity's "Past performance is no assurance or indicator of future returns."

Risk in an Era of Confidence [28Apr00, Morningstar] Jack Bogle reminds us that now, when "conventional wisdom" has apparently abolished equity risk, asset allocation is more important than ever.

When everyone assumes, at least implicitly, that the market is an actuarial table, that the past is inevitably prologue, and that common stocks, held over an extended period, will always produce higher returns than bonds--and at lower risk--then stocks inevitably will be priced to reflect that certainty. At that point, however, the certainty becomes that stocks will produce lower future returns, and at higher risk at that. It is impossible to escape the suspicion that such an actuarial mindset, if you will, is extraordinarily prevalent today among investment advisers, consultants, and economists--and, for that matter, the individual and institutional investors themselves. Forewarned is forearmed.

Critics of Indexing Aren't Making Sense [25Apr00, Wall Street Journal] Jonathan Clements addresses criticisms that indexing is a failure because the S&P 500 index is not sufficiently diversified and is dominated by a few large stocks. Meanwhile in The power of index investing [21Apr00, Globe & Mail] Ted Cadsby reviews the case for indexing in light of recent stock market volatility and the dominance of such stocks as Nortel Networks and BCE in the TSE indexes.

Withdrawal Strategies in Retirement [Apr00] Dave Lee has created a superb website that's dedicated to safe withdrawal strategies in retirement. He has extended the Trinity and Jarrett studies to analyze the effect of adding fixed annuities (e.g. most pensions) into the mix and to allow for "mid-course corrections" in down markets.

Make Your Retirement Dreams Come True [Apr00] Financial Adviser Paul Merriman concludes that for balanced, globally diversified portfolios a 6% withdrawal rate is likely to be sustainable indefinitely, but an 8% rate is apt to fail for all but the most aggressive, high equity portfolios.

Stay the Course Through Market Turbulence [14Apr00, Vanguard] If you found last week's stock market gyrations to be unsettling perhaps now is a good time to review these common sense pointers about maintaining focus on the long term.

Risk and Time [01Apr00, John Norstad] A popularly-held misconception that's suggested in books by Armstrong, Bogle, Malkiel, Siegel, et al is that the risk of owning equities decreases with time because the volatility of the average annual return on equities decreases as the time horizon increases. While the latter point is true, John Norstad shows that focusing on this is misleading because it is the total investment return over time that matters, not the volatility of the annual return and the risk (standard deviation of total returns) of owning equities actually increases with time. See also discussions 5267 and 5375 on the Morningstar Vanguard Diehards forum.

Investing During Retirement [64k Acrobat file] [Mar00, Frank Armstrong] Investing during retirement is completely different than investing&nbsp for retirement. This paper offers a comprehensive approach to investing after the "accumulation phase." Cited resources.

Bogle Warns: Stop Trading Funds [31Mar00, CNBC.com] Jack Bogle reemphasizes that the lack of long-term investing discipline, both on the part of individual mutual fund investors and by those who manage their funds, have become serious issues. The only "winners" at this game are the casino operators -- and as always, the taxman.

ETFs Soon to Be Released [23Mar00, SmartMoney] Here's a chart that shows the forthcoming Exchange-Traded Funds from Barclays and State Street. And this companion story reports that Vanguard is soon to enter the fray, Vanguard's Arachnophobia.

Funds Should Reveal Aftertax Returns, SEC Says [15Mar00 Morningstar] The US SEC has proposed that mutual fund companies report the after-tax returns of their funds so that investors can better assess fund performance and make more informed decisions about buying and selling funds.

Investors need the information because many do not clearly understand that "taxes are one of the most significant costs of investing in mutual funds," SEC Chairman Arthur Levitt said during the hearing. Studies have estimated that taxes cut more than 2.5% from the average stock fund's annual returns. By comparison, the average expense ratio for equity funds is 1.56%.

Among individual funds, the size of the tax bite ranges from zero to more than 5.5% depending on how aggressively a portfolio manager buys and sells, how well those trades work out, and how deft the fund is at using losses to offset gains, Levitt said.

"Two funds with identical pretax returns can have significantly different aftertax returns," he said. "Investors are entitled to know that."

How low can they go? [10Mar00 TheStreet.com] Following their recent skirmish over the fate of Canadian Index Participation Units TIPs 35 and TIPs 100, now in anticipation of Barclays Global Investors's (BGI) imminent introduction of several dozen Exchange-Traded Funds (ETFs), State Street Global Advisers (SSgA) has lowered the MER on its S&P 500 ETF, SPY, to 12 bp from 18 bp.

Fama & French for Dummies Learn the secrets to investing success in under 3 minutes! So it's not perfect (Gene Fama might be somewhat embarrassed to learn that he "developed the efficient market theory") but hey, it's all explained on one page and even better, in a short video clip.

Passive investing picks up speed [National Post, 09Mar00] Jonathan Chevreau reviews Brian Noble's new book, The Index Investing Revolution. If you're new to indexing then you'll be better off to start with books by Cadsby and Bogle et al. But if you want an in-depth technical treatise on indexing, especially as it relates to exchange-traded funds, index derivatives, and related issues then you'll want to read this book.

Style, subindex choices about to multiply [National Post, 01Mar00] Keith Matthews reviews the advantages both of indexing and the use of index-traded funds such as the forthcoming ETFs from Barclays Global Investors.

Exchange Traded Funds: A White Paper [IndexFunds.com] provides a brief summary of the history of ETFs, explains how they work and compares them to conventional open-ended index funds.

Fact and Fantasy in Index Investing Dr. Eric Kirzner provides a nice survey of the theoretical foundations of indexing, explains why indexing "works" and then summarizes the index products that are available today in Canada.

Discount brokers spark readers' scorn. [Globe and Mail, 10Feb00] Independent investors are so frustrated with the ineptitude of Canadian discount brokers that they're making a mockery of Dalbar's recent report on phone and Internet trading. Here's one 15-year TD Greenline veteran's solution: "What I did was transfer my total U.S.-dollar portfolio to TD Waterhouse in New York," this resident of Thornhill, Ont., reported. "I can tell you there is a world of difference."

OSC looks to ease cross-border traffic. [National Post, 10Feb00]
While the Ontario Securities Commission seems unwilling to protect Ontario investors from the inability of Ontario-based discount brokers to competently service their Ontario clients, it lectures us on the need for them to protect us from the far more competent (and cheaper) US discount brokers to the south. Shame on you OSC.

There Are No Rewards in Ignoring Risk. [Slate, 07Feb00] James Surowiecki reminds us that while for the past few years many Internet stocks have moved in only one direction, one ignores their substantially higher risk at one's peril. "The gospel of long-term investing is the right gospel to be preaching, but for the vast majority of investors it's only the right gospel if it comes accompanied by the dogma of indexation and an awareness of the idea of risk-adjusted returns. After all, you can make a lot of money in one night at the craps table. But if you keep going back, eventually it's the casino that gets rich."

Barclay's iShares Prospectus [Click on the left of the page on "Body: (Entire Filing)." But beware, this is a big file. You may want to download it in RTF format and then view it on your PC using something like MS-Word.] Here's preliminary information on the forthcoming Exchange-Traded Funds (ETFs), to be called iShares, from Barclays Global Investors.

The Stromberg Files has been completely updated to include new material. Glorianne Stromberg is a former commissioner for the Ontario Securities Commission whose 1995 and 1998 reports on the mutual fund industry have resulted in many important reforms that help individual investors get better advice and information.

Online fund broker claims cheaper rates. [National Post, 28Jan00] How low can they go? Now through ASL Direct you can for a flat monthly fee of $39.95 buy mutual funds with no commissions, no DSC penalties and a rebate of all the trailer fees. Something to investigate if you have a mutual fund portfolio of $100,000 or more.

Investing, circa 1973. [Morningstar, 27Jan00] In the latest instalment of his Investing for Keeps series, Frank Armstrong looks back at how investing was done a generation ago. The more things change...

The Bogle Financial Markets Research Center. He may have been forcibly retired from Vanguard's board but this saint keeps marching on. Here's a compendium of his speeches and essays, along with the promise of more good works to come, e.g. "His third book, tentatively titled John Bogle on Investing, will be published in the autumn of 2000."

The triumph of the shill [National Post, 14Jan00] If you attend any so-called mutual fund "seminars" during RRSP season, and especially if you are impressed by the slick presentations from the rented "shills," read this article before you make any investment decisions. And from a letter to the editor in response:

With nearly $400-billion in mutual fund assets in Canada and an annual management expense ratio of about 2%, $8 billion in assets is removed from the hapless mutual fund investors' pockets every year. And for what? For "professional" management that must of logical necessity underperform the market average? Some investment! Some fee!

The 1999 Performance Derby [Vanguard, 10Jan00] Index funds guru George Sauter debunks the claim that "Managed Funds Beat Indexes in 1999." He also offers five lessons on maintaining one's focus during these volatile times.

The Coffeehouse Investor [10Jan00] If you think Do-It-Yourself investing is too difficult, read this book. In perhaps an hour, author Bill Schultheis reduces successful investing to its basics. Establish an asset allocation that lets you sleep at night. Use low cost mutual funds. Save enough to ensure that time and compounding will let you reach your goals. Get this book. Then get on with your life.

The Quest to Outperform [07Jan00] Larry Swedroe (author of The Only Guide to a Winning Investment Strategy You’ll Ever Need ) summarises the advantages of indexing. He argues that each of the five costs incurred by actively-managed mutual funds -- operating expenses, cash, trading expenses, market impact costs and taxes -- add 1% or more annually to the cost of owning such a fund.

Humbling Lessons From Parties Past [New York Times, 02Jan00] Prof. Burton Malkiel offers a sobering perspective on the Internet mania and the prevailing view that "This time is different."

It is well to remember that investments in transforming technologies have not always rewarded investors. ... Occasionally, groups of stocks associated with new technologies get caught in a speculative bubble, and it appears that the sky is the limit. But in each case, the laws of financial gravity prevail and market prices eventually correct. The same is likely to be true of the dazzling stocks in today's market. ... At the very least, investors might well start the year by examining their portfolios, to see if their asset allocations are appropriate for their stage in life and their tolerance for risk.